Money tips for seniors facing the biggest decisions of their lives

Sixty might be the new forty, but important and uncomfortable financial decisions should be made as soon as possible.

Death is not fun to talk about. Or write about. Or experience, I imagine.

It’s one of life’s certainties – along with taxes – yet always gets ignored, even by those in the last decades of their lives.

Shutting your eyes to the financial implications of dying, illness and fellow old-age nasties is dangerous, and so is avoiding other money matters that should be dealt with before they become a problem.

Retirement specialists say seniors should think about several key financial decisions as soon as possible.

1. INVESTMENT AGGRESSION

How much financial risk are you prepared to take in retirement? There’s a good chance that a new retiree today could live another 30 or 40 years and will need their money to last.

I fondly remember going to a conference a few years ago (in person, back when that was possible!) where a medical specialist told the entire room a majority of us would live to 100.

Holding everything in cash and earning next-to-nothing, or less-than-nothing after inflation’s impact, makes little sense unless you have millions of dollars and are happy to see your wealth go backwards.

Advisers say growth assets such as property and shares still have a place in retirees’ investment mixes. They often recommend a buckets approach, where enough money to last three or four years sits in a cash “bucket” and the rest is invested for long-term growth.

2. EARLY INHERITANCES

People retiring relatively comfortably often want to help their children get a financial head start in life or a foot on the property ladder.

It’s a noble idea, but should only be considered if seniors have enough assets to cover their own lifestyle expenses.

Nobody wants to see their ageing parents struggle financially because they gave away too much money too soon.

Seniors are living longer but that’s no reason to put off uncomfortable money discussions.

3. WILLS

A proper will – not those cheap DIY kits you can buy for a few bucks – is the best way to ensure your assets go where you want.

It might cost $1000 or more but can be money well-spent if it prevents family fights once you’re gone. Lawyers and estate planners will bring up potential scenarios that normal people just don’t think about.

Remember that superannuation – where the bulk of many people’s retirement savings sits – does not form part of a will, unless you make a binding nomination for your super to be distributed to your estate upon death.

4. MORE LEGAL STUFF

Powers of attorney and advanced care directives give a family member or trusted friend the ability to make financial and health decisions on your behalf if you become incapacitated.

For some seniors these documents are more important than a will.

Another document to consider creating is an executor’s dossier, which lists all bank accounts, bills providers, investment contacts, funeral preferences and other important information that’s not included in a will.

5. AGED CARE

A report released last month by National Seniors Australia and Challenger found only 14 per cent of older Australians plan for aged care.

This lack of preparation can hit hard if their health suddenly heads south, with their adult children often having to make heartbreaking and complex decisions.

Seniors don’t need to decide all the details about their future aged care, but it’s a huge help if their children know their preferences about lifestyle, location and fast-growing home care options.

Originally published as Money tips for seniors facing the biggest decisions of their lives